TCS expects activity in the billion-dollar retail sector in the UK and Europe to outpace the company’s overall revenue growth due to strong demand for IT services , said a senior official.
The country’s biggest software exporter on Wednesday announced a multi-million dollar, multi-year deal with Marks & Spencer, which it has worked with for more than a decade, to transform the British retailer’s human resources operations.
The company’s commercial director for Europe, Abhijit Niyogi, told PTI that demand for IT services remains strong in Europe and the UK despite headwinds such as inflation, tightening rates, political unrest in UK and the ongoing Russian invasion of Ukraine.
Stating that the company he leads contributes more than $1 billion a year, Mr. Niyogi said it has seen faster revenue growth than reported by the company on an overall basis at the time. over the last two or three quarters.
About 10-15% of the total contract value (TCV) declared by the company comes from the company.
Currently, he is looking for medium to large sized deals with a revenue possibility of around $300 million as retailer demand continues in the market.
When asked if he sees the business continuing to outpace the broader revenue growth of the business, Mr Niyogi said yes.
“At least for FY23, I don’t see any downturn specifically on the back of a very good Q1. What we’re seeing for Q2 and Q3, the pipeline is very strong, the conversion rate is pretty good as well and demand is at an all-time high,” he added.
In the first quarter of the fiscal year, TCS reported 10.2% revenue growth to $6.7 billion, and the retail sector leads the pack with growth of more than 25% of its revenues at constant exchange rates.
He said retailers want their software vendors to be partners both in good times and also in test periods, and added that customers weren’t so skeptical because of macros.
Profit margins are typically higher in growth and transformation deals like the one it signed with M&S, as customers want to invest in the futuristic services that are relevant to their customers, as well as brand prominence. .
About 70% of the work on the M&S deal will be outsourced to India, while the rest will take place locally in the United States, Mr Niyogi said, adding that much of his existing staff have expertise in the field to understand the regulatory processes governing the retail sector. in the UK would be deployed on this project.
While TCS has also worked on HR solutions in the past, the work of M&S, which has more than 80,000 employees, is new because it is done on the Oracle human capital management platform, he said.